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Is time ripe for a currency union in emerging East Asia? The role of monetary stabilisation

  • Sánchez, Marcelo
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    This paper assesses the prospects for monetary integration between Emerging East Asian (EEA) economies. Our empirical analysis is based on a simple analytical framework for currency unions of small open economies, with a focus on the conduct of monetary policy in the presence of different types of shocks. Our empirical analysis looks at a number of supply-side characteristics of EEA countries, distinguishing between aggregate and tradable sector structural features. Moreover, we discuss the evidence on the cross-country variation of disturbances hitting the region. Our study indicates that, at present, EEA economies exhibit a high degree of cross-country supply diversity, while there is no compelling evidence that shocks are highly correlated across the region. JEL Classification: E52, E58, F33, F40

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    Paper provided by European Central Bank in its series Working Paper Series with number 0567.

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    Date of creation: Dec 2005
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    Handle: RePEc:ecb:ecbwps:20050567
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